wordpress blog stats
Connect with us

Hi, what are you looking for?

SEBI opens door for fintechs to enter mutual fund industry

The Securities and Exchange Board of India (SEBI) has decided that sponsors of Asset Management Companies (AMCs) need not meet the profitability criteria to apply for an AMC or mutual fund license, SEBI’s Board said on Wednesday. The move opens the door for a number of fintechs who currently distribute mutual funds to begin designing and selling their own mutual fund schemes.

Prior to this decision, fintechs would have had to prove its profitability track record to the markets regulator, in addition to having a minimum net worth of ₹50 crore. SEBI has decided that fintechs that can demonstrate having a net worth of ₹100 crore can apply for a mutual fund license, provided they maintain this net worth continuously for 5 years.

“To facilitate innovation and enhanced reach to more investors at a faster pace including tech-enabled solutions, sponsors that are not fulfilling profitability criteria at the time of making application, shall also be considered eligible to sponsor a mutual fund subject to having a net-worth of not less than ₹100 Cr. for the purpose of contribution towards the net-worth of the Asset Management Company,” SEBI said.

Some of the top fintechs in the country presently act as distributors or intermediaries for mutual fund schemes. Investors use these fintech platforms to invest into mutual funds, primarily due better customer experience, a wholly technology enabled platform and reduced or zero fees. In the case of Paytm Money, which is a registered investment advisor with SEBI,  investors can invest a minimum of ₹100 for a systemic investment plan (SIP) which caters to an entirely different segment of investors compared to traditional AMCs. On the other hand, Zerodha’s mutual fund platform, Coin, has 0 fees or commissions on a range of direct mutual fund schemes.

With the ability to apply for a license, fintechs like Paytm Money and Zerodha can design, package and sell mutual fund schemes that cater specifically to their customer base, which tend to be younger, tech-savvy and in many cases, first-time investors. Earlier this year, Zerodha applied for a mutual fund license, while Bajaj Finserv, NJ India and Samco Securities are awaiting final approval from SEBI on their mutual fund license applications.

 

Also read

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

News

The Reserve Bank of India (RBI) has constituted an internal working group to recommend regulations for digital lending platforms and mobile applications, it said...

News

The New York Stock Exchange announced, and then backtracked on delisting Chinese telecom companies China Mobile, China Unicom and China Telecom. “In light of...

News

In a significant development, the US allowed small drones to fly over people and at night. The country will also require drones to have...

News

The Department for Promotion of Industry and Internal Trade (DPIIT) has forwarded complaints against Amazon and Flipkart, made by traders body Confederation of All...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to Daily Newsletter

    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ